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Income Tax - Case Laws
Showing 21 to 40 of 175799 Records
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2025 (7) TMI 242
Rejection of final registration u/s 12AA - Application filled filed under item (B) of sub-clause (vi) instead of under the correct provision, section 12A(1)(ac)(iii) - Bonafide Intention and Inadvertent Non-Compliance of Changing Regulatory Framework - genuine hardship caused by procedural lapses.
HELD THAT:- As undisputed that the assessee filed Form No. 10AB on 11.06.2024, which falls well within the extended due date of 30.06.2024. The only technical defect in the application was that it was filed under item (B) of sub-clause (vi) instead of under the correct provision, section 12A(1)(ac)(iii). This falls squarely within the remedial framework contemplated by the Circular.
Accordingly, the basis of rejection, being purely procedural in nature, stands neutralised by the operation of the Circular, which is binding on the revenue authorities.
It is also pertinent to note that the genuineness of the trust’s activities was never questioned by the CIT(Exemption). The assessee had earlier been granted provisional registration, and there is no adverse observation in the order impugned as to the charitable character or the authenticity of the trust’s operations.
The spirit and intent of CBDT Circular No. 7/2024 is to mitigate genuine hardship caused by procedural lapses in an evolving compliance environment and to ensure that trusts and institutions acting bona fide are not deprived of their legitimate right to registration. The Circular must be construed liberally and purposively, so as to advance the cause of substantive justice rather than defeat it by technical interpretation. It is a well-settled principle of law that procedural lapses should not defeat substantive entitlements, particularly in matters involving public charitable trusts. The doctrine of substance over form, consistently upheld by Courts, enjoins that the real character and conduct of the assessee must prevail over mere form or coding errors in applications.
Rejection of the assessee’s application for registration in Form No. 10AB is unsustainable in law, having been rendered infructuous in light of the express relief granted under CBDT Circular No. 7/2024 and the assessee’s undisputed compliance with its terms.
We set aside the impugned order passed by the CIT(Exemption), Ahmedabad, rejecting the application for registration under section 12AB, and restore the matter to his file for fresh consideration. Appeal filed by the assessee is allowed for statistical purposes.
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2025 (7) TMI 241
Revision u/s 263 - pursuant to the impugned order passed u/s 263 a consequential assessment order has already been passed by the AO - HELD THAT:- Since the consequential assessment order has already been passed in compliance with the directions contained in the order under section 263 and no disallowance or adverse inference has been drawn by the AO, the grievance sought to be raised by the assessee in the present appeal stands rendered infructuous. Accordingly, the request of the assessee to withdraw the appeal is allowed.
Appeal filed by the assessee is dismissed as withdrawn.
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2025 (7) TMI 240
Addition u/s 68 - genuineness of the transaction not proved - addition made by the AO is based on the evidences available during the assessment proceedings which establishes that the transactions leading to the investment in the Assessee Company are not genuine -CIT(Appeals) deleted the addition - HELD THAT:- Assessee had produced the following documentary evidences to discharge its onus cast upon it u/s 68 of the Act:
a) Complete name and addresses of Share Applicants
b) Confirmation of Share Applicants
c) Copy of bank statements of shareholder reflecting the investments made in appellant company.
d) Income Tax particulars of shareholders, copy of their ITR and computation of income.
e) Copy of Audited Statement of accounts of Investor Companies.
In response to the notice issued by the AO the shareholders have appeared before the AO and confirmed their investment in the Assessee Company. In order to prove the identity of the parties, the Assessee produced documents to show that all the share applicants are existing income tax Assessee’s, they have been allotted with the PAN by the Department, having bank accounts and three out of four shareholders are Companies incorporated in Companies Act, 1956.
Genuineness of the transaction - Admittedly, the transactions have been taken place by account payee cheques and the shareholders have confirmed about their investment in the Company. The copy of the Bank statement, and copy of audited statement of account of the share holders have been furnished to the A.O.
Thus, the Assessee has discharged the onus cast upon it u/s 68 of the Act. It is further observed that one of the reasons for making the additions by the AO on the pretext of doubting the source of source of the investments.
The assessment year under consideration being 2011-12 and for the year under consideration, the Assessee has to explain the source of the amount credited in its book and need not prove the source of source.
AO has not made any further enquiry after the Assessee producing the documents to discharge the burden u/s 68 of the Act by producing the confirmation, ITR, balance sheet and the bank statement of the investors. CIT(A) committed no error in deleting the addition - Decided in favour of assessee.
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2025 (7) TMI 239
Addition under the head Income from Other Sources by CPC - Disallowance of capital loss on the transfer of assessee's rights on the said flat - difference between amount received back from the developer (Net of Service Tax) and the payments made to the developer by the Assessee (Net of Service Tax) - Assessee submitted that the addition made while processing return of income had resulted in double taxation of same income once under the head Capital Gains as offered by the Assessee and then again under the head Income from Other Sources as done by the Central Processing Unit while processing the return of income.
HELD THAT:- On perusal of the Form 26AS placed on record, we find that the developer had deducted tax at source on differential amount of INR.6.90 Crores. The aforesaid facts have not been disputed by the Revenue, and the same clearly establish that the differential amount of INR.6.90 Crores received by the Assessee from the developer on surrender of rights in the flat was included by the Assessee while computing Capital Loss (which has been accepted while processing return of income).
On perusal of Intimation Order issued u/s 143(1) we find that Capital Loss disclosed by the Assessee in the return of income has not been disturbed.
Revenue has failed to appreciate the correct facts, and has brought to tax the same differential amount of INR.6.90 Crores in the hands of the Assessee as ‘Income from Other Sources’ while processing return of income u/s 143(1). On perusal of the impugned order, we find that the Learned CIT(A) had appreciating the aforesaid facts correctly and had deleted the aforesaid addition of INR.6.90 Crores. We do not find any infirmity in the order passed by the Learned CIT(A) - Decided against revenue.
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2025 (7) TMI 238
Validity of Reopening of assessment - necessary step for initiating the proceedings u/s 148 - assessee argued that approval have been accorded in ‘mechanical manner’ - “Relevant Assessment Year” - reasons to believe - escapement of income’ relating to unaccounted production or of stocks - bogus purchases - universal/ uniformly acceptable standard of electricity consumption for calculating the excise duty liability - HELD THAT:- First necessary step for initiating the proceedings u/s 148, the approval granted by the PCIT that the reopening is automatic as per proviso (a) to Section 148A is misplaced. There is also a variance in the approval granted by the PCIT and the reasons as recorded by the AO as described above, and, thus, we have no hesitation in holding that the issuance of notice u/s 148 without their being any finding about the escapement of income is bad in law in view of the judgment of Vasanthi Ramdas [2024 (2) TMI 793 - KARNATAKA HIGH COURT] and Divya Capital One Pvt. Ltd. [2022 (5) TMI 1016 - DELHI HIGH COURT] following the judgment of Hon’ble Supreme Court in the case of Teleperformance Global [2025 (1) TMI 914 - SC ORDER] about the variance in the reasons as recorded by the AO and approval granted by the PCIT, the issuance of notice u/s 148 is quashed and, thus, the assessment as framed by the AO vide order dated 31.03.2023 deserves to be quashed as well.
Approval as granted by the Worthy Addl. CIT - By way of single letter, the AO forwarded the approval to the Addl. CIT by the single approval, by the Ld. Addl. CIT granted the approval to the AO. In the present case, since, the show-cause-notice dated 28.03.2023 was issued for compliance on 29.03.2023 by 7:00PM and then on the same day, the AO forwarded the letter for approval and on 30.03.2023, the Addl. CIT granted the approval.
As decided in Shree Krishna Pvt. Ltd. [1996 (7) TMI 2 - SUPREME COURT] the grant of approval must not be mere formality but a judicial function to be exercised with due care, application of mind and examination of the relevant material. Thus, we hold that the approval as granted by the Addl. CIT seems to be in a mechanical manner, accordingly, we hold that the approving authority u/s 148B had granted approval in a mechanical manner without any application of mind.
Electricity consumption - Part addition as sustained by the CIT(A) by applying average power consumption of 737.50 units per metric tons on the basis of five year average consumption unit by the assessee - By way of the seized record also, we find that there is a variation in the electricity units and variation is because of a number of reasons which have been dealt with by assessee by way of reply filed before the AO/ CIT(A). Simply on the basis of the variation, no addition on account of the unaccounted production can be sustained and coupled with the facts that no evidence of the purchase and sale outside the books of accounts have been found. The judgment of Hon’ble Supreme Court in the case of RA Casting [2011 (1) TMI 1302 - SC ORDER] is relevant to the facts & circumstances of the case.
We hold that the AO was not justified in assuming the production outside the books of accounts and consequent sales outside the books of accounts on the basis of the consumption of electricity units @ 606 units per metric tons. Further, we also hold that the adoption of 737.50 units per metric tons on the basis of the average annual power consumption for the different years by the CIT(A) is also not proper. Thus, we have no hesitation in dismissing the appeal of the Department by way of ground of Appeal No. 1 to 3 and allowing the appeal of the assessee as per Ground of Appeal No. 4.
Bogus purchases - Following the judgment of Prime Steel Industries [2025 (6) TMI 281 - ITAT CHANDIGARH] wherein, similar facts were there and the CIT(A) had sustained the addition by applying a GP rate on the bogus purchases as doubted by the AO. When the matter was agitated by both the parties, the entire addition on account of bogus purchases and profit embedded on such bogus purchases was deleted. Thus, we allow the appeal of the assessee wherein, the CIT(A) had sustained the addition of Rs. 7,70,048/- on the bogus purchases from the above said party and dismiss the ground of appeal of the department bearing 4 to 7.
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2025 (7) TMI 237
Validity of reopening of assessment - assumption of jurisdiction of AO - Assessment u/s 144 - Additions u/s 68 - HELD THAT:- It is clear that the assessee has not filed any return of income and any accounts etc. filed on 03.02.2023 were examined and found unsatisfactory.
As seen that the assessee has not specifically challenged the action of AO in adding sum u/s. 68 - In fact, neither before the Ld. CIT(A), nor before us have any details regarding turnover of business, sales and purchases thereon or even details of business expenses have been presented or any argument advanced in that direction.
Accordingly, we find no fault in the assumption of jurisdiction by AO as evidenced by the finding to this extent in the impugned order. Since the main challenge as per the grounds is regarding this aspect, the said grounds fail before us.
It also needs to be mentioned that one of the arguments of the Ld. AR pertained to passing of order u/s. 144. It needs to be mentioned that since the return of income was not filed in response to notice u/s. 148 of the Act, the AO could only pass an order u/s. 144 of the Act.
Appeal of the assessee is dismissed.
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2025 (7) TMI 236
Penalty u/s.271D - violation of the provisions of section 269SS -CIT(A) had dismissed the appeal as "infructuous and treated as withdrawn," based on the assessee's letter withdrawing a separate appeal against penalty u/s 270A
HELD THAT:- CIT(A) has wrongly dismissed the appeal of the assessee as infructuous and treated as withdrawn. The assessee’s letter is for withdrawal of the appeal pertaining to the penalty imposed u/s.270A of the Act, since the Hon’ble High Court had quashed the reassessment order.
The penalty imposed u/s.271D of the Act is in violation of provisions of sec.269SS of the Act and the same is independent from the quantum assessment framed. The assessee’s letter is also placed on record for the withdrawal of the appeal and the same pertains to an appeal arising from the penalty imposed u/s.270A of the Act. Appeal is restored to the file of the CIT(A). CIT(A) is directed to dispose of the same on merits. Appeal filed by the assessee is allowed for statistical purposes.
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2025 (7) TMI 235
Addition made towards cash deposit into bank account - assessee-society claims that source for cash deposit is out of sale proceeds of Toddy through four different societies and this fact has been explained to the CIT(A) by filing relevant evidences
Assessee-society is registered under the Societies Registration Act and it works for the welfare of the backward community called “Gouda” in the State of Telangana and also down trodden community. The society has four Toddy shops and four Excise Department licenses in and around Hyderabad city - HELD THAT:- The assessee-society claims that source for cash deposit is out of sale proceeds of Toddy through four different societies and this fact has been explained to the CIT(A) by filing relevant evidences. We find that, the assessee-society has furnished relevant audit reports of Toddy Tappers Cooperative Society maintained by the assessee-society for sale of Toddy.
The assessee-society had also furnished minutes books of the assessee-society and as per the said minutes, there is a clear evidence in the form of sale of Toddy through four different societies. Further, the assessee-society had also furnished monthly receipt and payment account of the four societies.
As per the details filed by the assessee-society, the main source of income of the assessee-society is sale of Toddy through different societies. Society’s are not operating any bank account. Whatever cash left with the societies has been transferred to the assessee-society and in turn, the assessee-society has deposited the cash into bank accounts.
Since the explanation of assessee-society in light of additional evidences was not filed before the AO and CIT(A), in our considered view, the matter needs to go back to the AO for further verification.
Thus, we set aside the order of the CIT(A) and restore the issue back to the file of AO with a direction to re-examine the claim of assessee-society in light of evidences that may be filed by the assessee-society to prove the source of cash deposit.
In case, the assessee-society is able to prove the source of cash deposit into the bank a/c on the basis of books of accounts and other evidences of four different Toddy Tappers Cooperative Societies, then, the AO is directed to delete the addition made towards cash deposit into bank account. Appeal of the assessee is allowed for statistical purposes.
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2025 (7) TMI 234
Addition being cash deposit in the saving bank account held with ICICI Bank - true nature of the business of the assessee, who is a small dealer of trading in vegetables - estimation of income on fair basis - As submitted profit of approximately 20% may be estimated on the turnover of the assessee - HELD THAT:- The documents furnished before the CIT(A) and before us to prove that the assessee is carrying on the business are not substantiated by credible evidence. The confirmation letters are by two individuals without copies of their PAN, Aadhar or any Affidavit.
Copies of bank statement indicate that there have been withdrawals also on various dates and transactions are spread across the year and the peak balance in the bank is not exceeding Rs. 3.00 lakh at any point of time. We therefore taking a liberal approach and being fair to both the parties accept the contention of the assessee that the alleged receipts are on account of sale proceeds of agricultural products. However, in absence of proper documents, we estimate the income @25% of the alleged gross receipts and estimate income of the assessee at Rs. 3,02,855/- and give part relief to the assessee.
Appeal of the assessee is partly allowed.
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2025 (7) TMI 233
Unexplained investment u/s 69 - Addition invoking provisions of section 115BBE - case was selected for limited scrutiny under CASS on the issue of “Whether investment and income relating to properties are duly disclosed” - HELD THAT:- AR submitted that all details were given to the AO and CIT(A) regarding the lenders. He further submitted that loans of four parties except his brother were repaid in the subsequent year. However, such explanation and details were not considered by the CIT(A).
The appellant has also relied on the decisions of Ambe Tradecrop Pvt. Ltd. [2022 (7) TMI 902 - GUJARAT HIGH COURT] Ayachi Chandrasekhar Narsangji [2013 (12) TMI 372 - GUJARAT HIGH COURT] and Ranchod Jivabhai Nakhava [2012 (5) TMI 186 - GUJARAT HIGH COURT] It was held by the Hon’ble Gujarat High Court that where the Department has accepted the repayment of loan in subsequent year, no addition was to be made in the current year on account of cash credit.
We find that CIT(A) has also not forwarded the additional evidence filed before him to the AO for verification and remand report. Considering all these facts and the binding precedent, we set aside the order of CIT(A) and restore the matter to the file of AO for fresh adjudication - Appeal of the assessee is allowed for statistical purpose.
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2025 (7) TMI 232
Ex parte order passed by CIT(A) - Unexplained money u/s 69A of cash sales - taxation u/s 115BBE - assessee submitted that noncompliance by assessee was not deliberate but due to non-receipt of the notices issued by the CIT(A)
HELD THAT:- The appellant has now furnished additional evidence including contra confirmations of customers, VAT returns of the year, month-wise sales and cash deposits of AY.2016-17 & 2017-18 and stock statement of gold ornament and bar. Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 permits the ITAT to admit additional evidence for any substantial cause.
The intention behind the Rule is that substantial justice should be done and interests of justice should be overriding consideration. The appellant could not produce all the details and evidences for the reasons discussed earlier.
The additional evidence filed by the appellant is accordingly admitted and the order of CIT(A) is set aside. Since the AO has also not verified the details filed by the assessee, the matter is restored to the file of AO for fresh adjudication after affording sufficient and reasonable opportunity of hearing to the assessee. Appeal of the assessee is allowed for statistical purposes.
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2025 (7) TMI 190
Procedure of service of notice under the Faceless Assessment provisions u/s 144B - Centralized Communication to Improve compliance of notice u/s 142(1) - Standard Operating Procedure (SOP) - HELD THAT:- On bare perusal of the SOP, it can be interpreted that if the assessee is not responsive to any notice u/s 142(1) of the Act then the department is mandatorily required to send physical letter at the latest address known through speed-post.
This procedure is apparently not followed by the respondent authorities.
The only defence raised is that in the earlier round, the petitioner had responded to such notice only after remand order by this Court, the petitioner was non-responsive and, therefore, there was no need for any further physical communication -Unfortunately, we are unable to accept such contention raised by Mr. Sanghani. The SOP specifies a mandatory requirement to send physical communication at the latest known address if the assessee is not responsive to the notice u/s 142(1). The stage at which this happens is insignificant. Once authorities have failed to follow the mandatory requirement of SOP, the impugned order dated 11.10.2022 would not stand at all.
Resultantly, the impugned order is hereby quashed and set-aside and the matter is remanded back to the Faceless Assessment Authority to comply with the SOP as envisaged by SOP dated 3.8.2022 and pass a fresh order.
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2025 (7) TMI 189
Reopening of assessment u/s 147 - reasons to believe - review v/s reopening - HELD THAT:- It is well settled that the power under Section 147 of the Income Tax Act cannot be invoked for a review of the assessment. Mere change of opinion cannot be a reason for the assessing officer to invoke Section 147.
In this case, as noted above, it cannot be said that the reasons shown in Ext.P5 are proper for the reason that those aspects were actually considered, as evident from Exts.P13 and P14, by the assessing officer at the time of scrutiny under Section 143. That being the position the re-opening in the case at hand can be considered only as a review of the original assessment. The same is impermissible. Assessee appeal allowed.
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2025 (7) TMI 188
NP rate determination - method of accounting - assessee in the course of proceedings before the ITSC, Kolkata had on suo motu basis rejected his books of accounts and admitted 10% net profit to the total gross receipts - scope of res judicata - HELD THAT:- The existence of infirmities and discrepancies in the accounts maintained by the assessee is sine qua non for invoking the provisions of Section 145(3) of the IT Act. Unless and until the infirmities and discrepancies are expressly noticed by the AO in the accounts maintained by the assessee, Section 145(3) of the IT Act cannot be invoked. Similarly, the principle of res judicata does not apply to the assessment proceeding.
It is well settled principle of law that in taxation matters, the strict rule of res judicata as envisaged by Section 11 of the Code of Civil Procedure, 1908 has no application. As a general rule, each year’s assessment is final only for that year and does not govern later years, because it determines the tax for a particular period.
It is, therefore, open to the Revenue/Taxing Authority to consider the position of the assessee every year for the purpose of determining and computing the liability to pay tax or octroi on that basis in subsequent years. A decision taken by the authorities in the previous year would not estop or operate as res judicata for subsequent year. See VIDYUT METALLICS LTD. AND ANOTHER [2007 (9) TMI 399 - SUPREME COURT]
The Supreme Court in the matter of M.M. Ipoh and others v. Commissioner of Income Tax, Madras [1967 (7) TMI 8 - SUPREME COURT] has clearly held that the doctrine of res judicata does not apply so as to make a decision on a question of fact or law in a proceeding for assessment in one year binding in another year.
As in Dhakeswari Cotton Mills Limited [1954 (10) TMI 12 - SUPREME COURT (LB)] as clearly held that in making the assessment, the Income Tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all.
In the present case, both the authorities have clearly held that the adoption of net profit @ 10% of the total gross receipts by the AO has been made on pure guess work only and record of the assessee has not been found deficient and no infirmity or defect was noticed by the AO, therefore, Section 145(3) of the IT Act could not be invoked and assessment could not have been done holding 10% net profit of the total gross receipts making best judgment assessment under Section 144 of the IT Act.
In that view of the matter, the concurrent finding of the two Courts below – CIT (Appeals) and the ITAT partly interfering with the order of the AO is in accordance with law and the substantial question of law is answered in favour of the assessee and against the Revenue.
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2025 (7) TMI 187
Delay in filing the income tax return - application filed for condonation of delay in filing the Return of Income rejected - denial of refund of excess Tax Deducted at Source on non filling of ROI - procedural aspect of the income tax law - petitioner being a non-resident was under the impression that no Return of Income was required to be filed as per the provisions of the Act as there was no tax liability - when legitimate refund was not received by the petitioner, he thought it fit to file return claiming return at the time of his visit to India.
HELD THAT:- When the petitioner was not aware of the procedural aspect of the income tax law as well as the fact that he was medically unfit during the pendency of the application under Section 119(2)(b) of the Act, the respondent authority could not have rejected the application as filing of return for claiming benefit under the provisions of the Act is procedural and the benefit accrued to the assessee cannot be taken away on account of technicalities when there is a genuine hardship. This can be drawn from the case of Sitaldas K. Motwani [2009 (12) TMI 36 - BOMBAY HIGH COURT] as well as the case of Bombay Mercantile Co-op. Bank Ltd. [2010 (9) TMI 23 - BOMBAY HIGH COURT]
Considering the facts of the case as well as the settled legal position, the petition succeeds and is accordingly allowed. The impugned order is hereby quashed and set aside and the matter is remanded to the respondent to pass a fresh order to condone the delay in filing the income tax return so as to enable the petitioner to get the refund as per the provisions of the Act.
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2025 (7) TMI 186
Reopening of assessment u/s 147 - denial of deduction u/s 54 -disallowing the capital gains only on the ground that the amount was deposited after the sad demise of original assessee in the name of the petitioners as legal heirs - allowability of investments made by the legal heirs in their own names, after the death of the original assessee,
HELD THAT:- The reasons recorded by the AO which are reflected in the impugned assessment order only refers to the disallowance as it was on the ground that the same was not disclosed in the return of income and the entire amount of sale consideration would be liable to be taxed under the head of capital gain.
Thereafter, it appears that the respondent-AO without there being any tangible information, that income had escaped assessment and without considering the fact that the petitioners have filed the return of income after the sad demise of the late Kamalbhai Ramniklal Shah, wherein the petitioners have disclosed the fact of sale of the immovable property and deposit of such sale consideration to claim the deduction under Sec. 54 amounting to Rs. 3 crores as against the amount liable for capital gains and as such no capital tax was payable by the petitioners in view of the investments made as required under Sec. 54 of the Act, has passed the impugned Assessment Order by disallowing the capital gains only on the ground that the amount of Rs. 90 lakhs was deposited after the sad demise of Kamalbhai Ramniklal Shah in the name of the petitioners as legal heirs and therefore the same could not have been considered as an amount invested as required under Sec. 54 of the Act. Such an hyper-technical approach adopted by the respondent-AO can never be said to provide ground for assumption of jurisdiction to reopen the assessment.
This petition succeeds and accordingly, the impugned notice issued u/s 148 as well as the Assessment Order passed u/s 147 read with Sec. 144B.
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2025 (7) TMI 185
Reopening of assessment - Bogus LTCG - eligibility of reasons to believe - denial of exemption income u/s 10(38) - additions u/s 68 - mandation to apply independent application of mind - AO alleged transactions in "penny stocks" through 77 transactions, linked to Consortium Capital Private Limited as connected with assessee - HELD THAT:- Merely placing reliance on any other authority without recording own satisfaction or bringing any cogent substance on record shows that, without applying his mind, the AO has issued the notice, which is invalid. Since the AO has formed his reason to believe just on the basis of the information received from the Director of Income Tax (Inv.), Kolkata, that income has escaped assessment and not a reason to believe which is necessary for reopening of the assessment proceedings.
In our view, the AO cannot reopen the assessment merely on the basis of information received without applying his independent mind to the information and forming an opinion.
It is well established that the reason recorded by the Ld. A.O. shall be concrete, specific and shall be recorded after making all necessary and independent enquiries and the AO should clearly ‘form his belief’ that the assessee has escaped income and only then can he reopen the assessment u/s 147 of the Act. The reopening for the purpose of fishing inquiries or to verify the details is not permitted u/s 147 of the Act - Decided in favour of assessee.
Bogus LTCG - Addition on the basis of the SEBI report - We are of the considered view that just the modus operandi, generalization, preponderance of human probabilities cannot be the only basis for rejecting the claim of the assessee. Unless specific evidence is brought on record to controvert the validity and correctness of the documentary evidences produced, the same cannot be rejected.
SEBI order, while identifying price manipulation by specific entities in the JMD Telefilms scrip, does not name or implicate the assessee in its findings. particularly for her transaction in Patch 6. Therefore, sale at a lower price Rs. 54-55 during a period of price decline, after holding the shares for over three years, contradicts the modus operandi of manipulative trades. The absence of any SEBI enquiry involving the assessee and the legitimate nature of her stock exchange transaction further affirm the genuineness of her LTCG claim under Section 10(38).
We noticed that the CIT(A) overlooked the crucial fact that the Assessee did not purchase shares in the scrip of Consortium Capital Ltd, a private company, nor was beneficiary in any manner. However, the AO relied on the specific report of Securities and Exchange Board of India on JMD Telefilm Ltd.
Now, in the present case, we found that the SEBI has not issued any notice to the assessee or broker of the assessee in relation to these trades. The assessee submits again that it has never received any notice for violating the SEBI Rules or regulations.
Therefore, the AO has made a baseless allegation and put reliance of the Investigation report, without any substance and corroborative evidences. The SEBI Report reproduced by the AO in the assessment order has nothing to do with the assessee. If some person manipulates the trades in JMD Shares does not mean that the assessee was also involved. There is no evidence from AO or in the report reproduced by the AO in assessment order.
Therefore, the addition made by placing reliance on the SEBI stands deleted, and the above-ground stands allowed.
Penny stock transactions - With regard to the so-called Penny Stock Capital Gain, as recently decided in the case of Ms. Farrah Marker [2016 (6) TMI 786 - ITAT MUMBAI] wherein it was held that the Long-term capital gains on sale of "penny" stocks cannot be treated as bogus & unexplained cash credit if the documentation is in order & there is no allegation of manipulation by SEBI or the BSE. Denial of right of cross-examination is a fatal flaw which renders the assessment order a nullity.
Assessee appeal allowed.
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2025 (7) TMI 184
Addition u/s 68 - unexplained income with regard to cash deposits made out of normal course of business - levying tax u/s 115BBE - additions made in the present case on account of the fact that there was an abnormal increase in cash deposits during the demonetization period as compared to the pre-demonetization period
HELD THAT:- AO had accepted the assessee’s entire sale and purchase offered in the books of account as genuine. Therefore, the addition made by the AO on account of cash deposited during the demonetisation period on the pretext that the assessee had created an artificial scenario in its books of account where unaccounted income was shown by them as cash sales and then deposited into bank accounts.
There is no evidence/proof of the said observation made by the AO. Since there is no evidence with the explanation put forth by the assessee is justified with reference to various documents, such as Cash book [day wise] - Showing names of persons whom sales is made, Party wise purchases with Name/ Address /PAN, Party wise sales with Name/ Address /PAN, Purchase Register - month wise/Party wise also, Sales Register - Date wise / Item Wise and Bank Statement of all bank. And further, such cash deposit has been shown as sales in the P&L account and has also been offered for taxation.
Therefore, in our view, no addition should have been made in the case of the assessee.
Reliance is being placed upon the decision of Vishva and Devji Diamond Pvt. Ltd. [2025 (2) TMI 1025 - ITAT CHENNAI] wherein it has been held that where assessee, engaged in trading business of gold and diamond jewellery, claimed that cash deposited in bank account during demonetization period pertained to sale proceeds of gold and diamond jewellery collected from its customers, since assessee's claim was backed up by relevant evidences, impugned addition made under section 69A, read with section 115BBE treating cash sales as bogus was to be deleted.
Also in Charu Agarwal [2022 (4) TMI 537 - ITAT CHANDIGARH] wherein as held that held that where cash deposited by assessee was out of cash sales which had been accepted by Sales Tax/VAT Department and not doubted by AO and there was sufficient stock available with assessee to make cash sales, sales made by assessee out of existing stock were sufficient to explain deposit of cash (obtained from realization of sales) in bank account and, thus, cash deposits could not have been treated as undisclosed income of assessee.
Appeal filed by the assessee is allowed.
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2025 (7) TMI 183
Rejection of books of accounts - estimation of income - suppressed purchases, suppressed sales and unaccounted payments - HELD THAT:- The Bench was of the view that net profit rate of 5% would be justified on the total turnover worked out by the Ld. AO after including the sales mentioned in the impounded documents SP-68 and SP-73 and SP-42 etc., which were not disclosed in the books of account to the sales recorded in the books of account as after rejection of books of account the profit is to be estimated. Both the Ld. DR and the Ld. AR were fair enough not to argue against the decision before us. The Ld. AO is, therefore, directed to apply the net profit rate of 5% to the aggregate of the sales shown in the books of account and the unrecorded sales found in the impounded documents and reduce the net profit shown by the assessee and add the difference to the total income returned by the assessee.
No separate addition on account of any other head of expenditure relating to the trading and profit and loss account would be called for nor on account of low house hold expenses and undisclosed investments in the name of the daughters etc., which would be covered by the enhanced income estimated. The Ld. AO is directed to apply the net profit rate of 5% to the sales as worked out on the basis of these directions and allow consequential relief to the assessee. Decided in favour of assessee partly.
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2025 (7) TMI 182
Addition u/s. 69C - availing accommodation entries of bogus purchases from three hawala parties, identified by the Sales Tax Department of Maharashtra - CIT(A) restricting the addition @ 4.40% as against the 20% addition made by AO u/s. 69C - AO recorded that assessee has not furnished delivery challans and corresponding sales to third party, copy of octroi receipt and transportation receipt were not furnished.
HELD THAT:- CIT(A) has recorded that the AO has not disputed the sales. Such finding is contrary to the finding of assessing officer on page 3 of assessment order wherein the assessing officer clearly recorded “b.
The assessee has failed to link the material purchased with sale made by it with the stock register or movement of goods with supporting documents”. Thus, CIT(A) has not appreciated the fact in proper perspective. Still, disallowance made by AO was on higher side, therefore, disallowance to the extent of 10% of the impugned/bogus purchases from three parties would be fair, reasonable and sufficient to avoid the revenue leakage. Thus, the AO is directed to restrict the addition @ 10% of purchases. Appeal of the revenue is partly allowed.
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